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Ruling paves way for increased 'upward sentencing' in healthcare fraud cases

Attorney: Appellate court ruling will make it easier for prosecutors to get an enhancement when defendants hold a position of trust

Healthcare executives and physicians who commit healthcare fraud may be looking at tougher sentences, particularly those who are considered to be in a position of power and trust, thanks to a recent court decision that solidifies the definition for upward sentencing.

decision handed down by the U.S. Court of Appeals for the Third Circuit on Dec. 31, affirmed a district court's decision to apply an upward adjustment to a radiologist's criminal sentencing for paying illegal kickbacks. 

The case marked the first time the Third Circuit court addressed an upward sentencing adjustment for a defendant in a position of trust who perpetrates a Medicare or Medicaid kickback scheme--and it won't be the last, says Hope C. Lefeber, a criminal defense attorney in Philadelphia, Pennsylvania, in an exclusive interview with FierceHealthPayer: Antifraud.

"It will just make it easier for prosecutors to get an enhancement," she says. "It will be automatic; they'll just cite this case."

The radiologist, Ashokkumar R. Babaria, M.D., pleaded guilty in 2012 to paying kickbacks to physicians in exchange for patient referrals. At sentencing, the district court applied a two-level adjustment for abuse of a position of trust and sentenced him to 46 months in prison. Babaria appealed the decision, but the Third Circuit court agreed that he held a position of trust as a medical director and manager of Orange Community MRI.

Sentencing for white collar criminals has become gradually stiffer over the last several years, particularly in the financial industry, where punishments for convictions of fraud or money laundering have gone from five years to as high as 150 in the last several decades. In 2012, the U.S. Sentencing Commission stiffened its federal-sentencing guidelines for securities fraud, mortgage fraud, human rights offenses and drug offenses and broadened the definition of abusing a position of trust. The recent Third Circuit decision indicates that stiffer penalties may await those that commit healthcare fraud.

But Lefeber says the upward adjustment is too liberally applied--and that this decision will only reinforce that approach. In the Babaria case, the court concluded that the radiologist's position of trust made the crime more difficult to detect. But Lefeber doesn't think his position merited an enhanced sentencing.

"It should be that he abused some special position of trust or that he did something in particular that convinced them to rely upon him, which made the crime hard to detect," she says. "Just because he was a radiologist, in my view, he didn't do anything that was hard to detect. A kickback is a kickback; it has been around since the beginning of time."

Instead, she says, courts should apply a sentencing enhancement to fraud cases with truly extenuating circumstances, something that goes above and beyond the normal fraud scheme.

After the Third Circuit decision, she says upwards adjustments for abuse of a position of trust could become so commonplace it will be applied to every healthcare fraud sentencing decision.

"If you're going to commit fraud, you're going to get this sentencing enhancement; it's automatic," she predicts. "I would challenge the government to give me an example of a situation where this wouldn't apply. I don't think they could come up with one."

For more:
- here's the decision (.PDF)
- here are the guidelines (.PDF)

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